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Investment banking profits at BNP Paribas rose 28% in the three months to the end of June to a record â¬1.2bn ($1.7bn), propelled by "rapid growth" in its equity capital markets business in Asia and a surge in advisory revenues.

Baudouin Prot, the BNP Paribas' chief executive, warned this morning of a “less favourable environment” in the second half of the year. The bank's advisory business has yet to receive fees for its work on the merger of French utilities Gaz de France and Suez, which remains mired in bureaucratic entanglements.

However, the bank said its exposure to the US subprime market and leveraged finance was “negligible” and “limited”.

Revenues from corporate and investment banking climbed to €2.5bn in the second quarter as profits from advisory and capital markets business reached a record €722m, up 56% compared to the same period a year before.

Equity and advisory revenues rose by a third to €1.8bn, on the back of equity derivatives and initial public offerings in Hong Kong, China and Korea, as moves by Prot to expand the bank's business outside Europe bore fruit.

The increase in revenues in investment banking more than offset an 19% rise in operating expenses, which breached €1bn for the first time, as BNP Paribas stepped up hiring across the business, particularly in equity derivatives.

Investment banking and asset management accounted for 56% of BNP Paribas’s group profits for the quarter of €3.3bn, up from just under 50% in the previous quarter.

Despite the record results, analysts at specialist financial services investment bank Keefe, Bruyette & Woods said the strong performance of BNP Paribas’s investment banking business was unlikely to “generate much excitement”.